VEL
Velocity Financial, Inc.
$14.67
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 67.8% below fair value
You pay
$14.67
Bear
$30.36
Fair
$45.50
Bull
$54.59
Bear
$30.36
+107.0%
ROTCE 12.1% → 1.83x TBV
Fair
$45.50
+210.2%
ROTCE 16.1% → 2.74x TBV
Bull
$54.59
+272.1%
ROTCE 18.5% → 3.28x TBV
Adjust Assumptions
16.1%
8.4%
Key Value Driver
ROTCE (16.1%) vs. cost of equity (8.4%)
Implied Market Multiple
0.88x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$20.00
Divergence from AlphaVal
127%
Summary
With ROTCE of 16.1% vs. 8.4% cost of equity, fair P/TBV is 2.74x on $16.63 tangible book, implying $45.50 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $20.00 (from 7 analysts). Our estimate is 127% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly